I'm within a couple of years of retirement, and have been contributing 20% of my pre-tax paycheck every week for a long time. It is diversified with stocks and bonds and was doing well until this latest crash. I am not going to pull any money out, but thought about just putting 6% in and saving the extra money. I don't know when the market will bounce back, could be years. Any thoughts on this? Thanks.

If you can make due without the cash right now, I would continue making 20% contributions.

It may be a long time before the market recovers, but hopefully you also will have a long time before you croak.

Aeteocles alludes to a good point - continuing to put money in now while prices are “lousy” allows you to buy more than you could at “better” prices. Dollar cost averaging pays off. Remember, lousy prices for holders or sellers are great prices for buyers.

Now if you are retiring in two years and you won’t be able to get by for a while without money from your retirement account, then you may want to save some cash out, or have some portion of the retirement account in something more “cash like” - treasuries or something similar. I suspect things will get a lot better before two years is up, but I have no crystal ball. It is a whole lot easier to let you equities ride through down periods if you have some cash or treasuries to get by for a while.

quote:

Originally posted by slosig:
Aeteocles alludes to a good point - continuing to put money in now while prices are “lousy” allows you to buy more than you could at “better” prices. Dollar cost averaging pays off. Remember, lousy prices for holders or sellers are great prices for buyers.

Now if you are retiring in two years and you won’t be able to get by for a while without money from your retirement account, then you may want to save some cash out, or have some portion of the retirement account in something more “cash like” - treasuries or something similar. I suspect things will get a lot better before two years is up, but I have no crystal ball. It is a whole lot easier to let you equities ride through down periods if you have some cash or treasuries to get by for a while.

THIS. If you'll need it in a few years divert your additional investment to something safe. If not, now is a very good time to put money in the market. If this blows over in a few month AND Trump is re-elected, I would think the economy should recover in 4 years or less.

I'm in my seventies and well into retirement. Three weeks ago I moved everything in our 401K's into GNMA Bonds for both my wife and I. We have not been hurt by this at all. Thankfully.

When this all levels out, and I would expect that by the end of summer, I will re-adjust things.

I have two thoughts. 1) It is an opportunity to buy cheap stocks right now. 2) Having cash on hand is never a bad idea. I think you are talking about a good balance, leaving what you have in the market alone, continuing to contribute, and having some cash on hand.

Respectfully, none of us here, experienced or qualified as they may be, can truly answer this with good informed advice because we don't know all of your circumstances.

If you have a financial adviser, you need to be having the discussion with them, not us. A 401k is just one piece of the puzzle.

Personally, given the current situation, if it were me, I would be DCAing into the market like Elvis on a ham sandwich (Dollar Cost Averaging).

The way I read it: we know there is support at Flight Level 300 (Dow at 30,000 or thereabouts). Some say the market was over-valued and corrected, but I say this was fundamental strength from a winning Trump economy.

I think once we get through the virus thing, the bulls will scream for past glory and we'll see the market go ballistic. Probably about the time the new Top Gun is released, as a matter of fact. And if when the Donald gets re-elected, wow.

Damn, I wish I had some money on the sidelines.

I heard a financial pundit give some sage advice recently. He said don't even look at your 401(k) statements for the next six months, much less make any changes.

That said, it is very nice to have funds that are NOT in a 401(k) and subject to withdrawal penalties.

There you go, more contradictory advice, for free.

Oh, and congratulations on putting away 20% of your pay. Every single American should be doing this, starting at age 30. Your retirement demands it in a market where the 10 year Treasury yield is less than inflation.

Best wishes.

quote:

Originally posted by hberttmank:
I'm within a couple of years of retirement, and have been contributing 20% of my pre-tax paycheck every week for a long time. It is diversified with stocks and bonds and was doing well until this latest crash. I am not going to pull any money out, but thought about just putting 6% in and saving the extra money. I don't know when the market will bounce back, could be years. Any thoughts on this? Thanks.

IF you were my client, I'd offer the following:

Do not sell anything right now. Continue to maximize contributions (as much as you can), and blend down (dollar cost averaging) your positions. If you plan to retire by 2024, wait for a decent rebound before you start pulling money out. Investing your contributions now will pay greater dividends than your existing portfolio.

Make the contributions into a cash account IRA for the time being to limit any losses. You still are saving and get the deduction.
If/when the market shows signs of stabilizing, you can get back into something with more growth. You don't have to hit the bottom perfectly to benefit.
I don't see a stop right now to the unstable market and you may need that money sooner if you can retire. You may also have to delay retirement, assuming you have a job and debt.
You didn't say what your financial picture was so it's hard to know what to say otherwise and we are all guessing at this point.

Ca you set it up where your contributions would be to buy Platinum? Its awfully cheap right now - even if it were to go down farther, its still well below mining cost. Admittedly, its main uses are jewelry, and organic chemistry, as far as I know, and it will be awhile until either of those buyers spring back up.

I increase my regular withholding by 5% and set up my “catch up” for another 5%

quote:

Originally posted by hberttmank:
I'm within a couple of years of retirement, and have been contributing 20% of my pre-tax paycheck every week for a long time. It is diversified with stocks and bonds and was doing well until this latest crash. I am not going to pull any money out, but thought about just putting 6% in and saving the extra money. I don't know when the market will bounce back, could be years. Any thoughts on this? Thanks.

i think 3-5 years from now we will be 100% good to go and then some.

keep doing what you're doing.

because you are 'close' to retirement -- maybe put 75% of your NEW contributions into the 'stable / fixed income' choice just to build that up for peace of mind.

whatever you do -- do NOT sell out of the equity / stock portions at current levels. They will rebound in due time.

(fwiw I am in my 50s with 25-ish years in the stock market so have invested through Y2K, Dot Com bust, 9/11, GWOT, Financial Crisis, etc ... ) The turmoil subsides eventually.

------------------------------

So my take is a bit different than most here. And you are asking for opinions so there are no wrong ones.

We are with in a year of retirement. Made an adjustment to our smallish portfolio to roughly a 50/50 mix. So a more conservative mix about 18 months ago in preparation for retirement. We are still taking a hit right now. But not horrible. Will have to see how things pan out to determine if our plans can stay as is or not.

If I were in your shoes right now I would do what you are suggesting. Still put a little in but turn the balance into cash and keep on hand. I see little value in pouring 20 percent into a market right now. As close as you are to retirement cash would be something I would want to have tucked away.

I am not saying others are wrong. This is just what I would feel comfortable doing.

Good luck and stay safe.

Keep putting in as much as you can. Market will turn eventually big time

401K is a long term investment, change nothing and ride it out, you are buying cheap right now which is a good thing.

Treat your 401k like you do your face with this virus......
DON’T TOUCH IT!!!

Thanks for all the replies everyone. I have a job, and no debt so leaving it at 20% seems like the best thing to do. Hoping and praying the market turns around within a couple of years. I just wanted some input, you guys were a big help.